The term 'Social Cost of Carbon', increasingly used in climate policy discussions, refers to which one of the following?

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Accepted Answer

A. The long-term economic damage, expressed in monetary terms, caused by emitting one additional tonne of carbon dioxide in a given year. The Social Cost of Carbon is a standard climate economics metric that measures the long-term damage, expressed in monetary value, caused by emitting one additional tonne of carbon dioxide in a given year. It is used to price the externality of carbon emissions into policy and investment decisions, not to describe an actual market trading price, a subsidy outlay, or the physical cost of carbon capture, which rules out options B, C and D respectively. Hence option A correctly defines the term.

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A. The long-term economic damage, expressed in monetary terms, caused by emitting one additional tonne of carbon dioxide in a given year

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B. The market price a company must pay under India's domestic carbon-credit trading scheme for every tonne of carbon dioxide it emits

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C. The total government subsidy spent annually on promoting low-carbon technologies

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D. The cost, per tonne, of physically capturing and storing carbon dioxide underground